Knowing when to stop a project in Basel: a test of leadership

In Basel's pharmaceutical, life sciences and Rhine logistics sectors, as in international R&D teams, stopping a project can be as difficult as launching it. For the “Leadership d'excellence” programme at SHR — Swiss Human Resources, the managerial question is precise: how can a justified continuation be distinguished from commitment sustained by past investment?

What the literature establishes

Barry M. Staw (1976, Organizational Behavior and Human Performance) experimentally studied successive resource allocation decisions following unfavourable outcomes. In this setting, participants who were personally responsible for the initial decision committed more additional resources than those who were not. The finding indicates that defending an earlier decision can influence the next allocation, beyond a straightforward assessment of the results.

The weight of resources already committed

Hal R. Arkes and Catherine Blumer (1985, Organizational Behavior and Human Decision Processes) documented the sunk cost effect: a prior investment of money, effort or time can encourage continuation of an activity. Their research highlights, among other explanations, the desire not to appear wasteful of resources already committed. For a manager, justifying additional funding by pointing to “everything we have already invested” is therefore a signal to investigate, not a sufficient argument.

The premature conclusion

One might conclude that a disappointing project should be stopped quickly. Yet this research provides no universal threshold for abandonment: unfavourable results can also generate knowledge that changes future prospects. The useful distinction is between irrecoverable past costs and benefits, costs and risks that can still be influenced, rather than between persistence and stopping. (our executive and employee training programmes)

What the evidence does not settle

These studies do not directly validate portfolio decisions in Basel's pharmaceutical industry or investments in Rhine logistics. Experimental designs isolate particular mechanisms but do not reproduce all the regulatory, contractual and scientific constraints of international R&D. In practice, a decision to continue is therefore not enough to diagnose a bias: the available information and the future consequences of stopping must be examined.

A practical check in Bâle

One practical application of the “Leadership d'excellence” programme is to require, before each renewal of resources for a Basel project, a note distinguishing sunk expenditure, avoidable future commitments and expected outcomes, with an explicit criterion for reassessment. A reviewer who did not sponsor the initial decision checks that the justification for continuing rests on future prospects rather than past effort alone. The indicator is the proportion of renewals supported, before the decision, by a complete, dated note that can be checked against the decision register. This measures the traceability of the decision-making process, not yet its financial return or the elimination of bias. To go further: explore the Executive Leadership training in Basel in the canton of Basel-Stadt, or browse our executive and employee training programmes in Switzerland.

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